With the Fed locking in rate cut expectations, how much further can gold rally? Can it break through the moving average resistance?
2025-07-31 16:39:42
Gold prices gained some positive momentum during Asian trading on Thursday (July 31), recovering some of the losses suffered the previous day due to hawkish comments from the Federal Reserve. Gold prices fell to a monthly low of $3,268 overnight and are now trading up 0.94% at $3,305.34 per ounce.
In fact, Federal Reserve Chairman Jerome Powell expressed no preference for discussing a rate cut at the September meeting. This, combined with better-than-expected U.S. macroeconomic data released earlier on Wednesday, pushed the U.S. dollar index to a two-month high, severely hitting the non-interest-bearing asset gold.
As investors await the upcoming release of new data, dollar bulls paused to take a breather ahead of the release of key U.S. inflation data - the Personal Consumption Expenditures (PCE) price index, providing some support for gold prices.
Apart from this, cautious market sentiment is seen as another factor supporting the safe-haven precious metal. However, dwindling expectations of an immediate rate cut by the Federal Reserve could limit aggressive bets by gold bulls and cap further price gains.
The U.S. Federal Reserve kept its benchmark interest rate unchanged for a fifth consecutive meeting, keeping it in a range of 4.25% to 4.5%, despite intense pressure from U.S. President Donald Trump and his allies to lower borrowing costs.
However, the decision was dissented by Fed Governors Michelle Bowman and Christopher Waller, marking the first time since 1993 that two governors dissented from a rate decision.
In the accompanying monetary policy statement, the committee struck a more optimistic note, noting that the economy continued to expand at a solid pace.
Separately, Federal Reserve Chairman Jerome Powell said at a post-meeting press conference that the central bank has not yet decided whether to cut interest rates in September.
This pushed the dollar to a two-month high on the back of upbeat U.S. macroeconomic data.
Automatic Data Processing reported that U.S. private sector payrolls increased by 104,000 in July after a revised decline of 23,000 in the previous month. Separately, the Commerce Department released an advance estimate of U.S. gross domestic product (GDP) showing the economy expanded at a 3.0% annualized rate in the second quarter after contracting 0.5% in the previous quarter.
Traders are now looking to the core PCE price index, the Federal Reserve's preferred inflation gauge, for fresh momentum. Meanwhile, dollar bulls appear reluctant to make aggressive bets, helping gold prices attract some buyers during Thursday's Asian trading session.
After breaking below the ascending triangle on July 25, gold prices fell overnight yesterday, fulfilling the measured decline of the triangle's consolidation. Meanwhile, gold began to rebound from the lower track of the box and the X-line. Suppressed by a bearish alignment of the upper moving averages, bulls need to wait for gold prices to fluctuate, allowing the 10, 20, and 50 EMAs to recover, and for the bearish downward alignment of the moving averages to turn flat before launching an attack in line with fundamental developments.
(Spot gold daily chart, source: Yihuitong)
At 16:39 Beijing time, spot gold was trading at $3311.03 per ounce.
In fact, Federal Reserve Chairman Jerome Powell expressed no preference for discussing a rate cut at the September meeting. This, combined with better-than-expected U.S. macroeconomic data released earlier on Wednesday, pushed the U.S. dollar index to a two-month high, severely hitting the non-interest-bearing asset gold.
As investors await the upcoming release of new data, dollar bulls paused to take a breather ahead of the release of key U.S. inflation data - the Personal Consumption Expenditures (PCE) price index, providing some support for gold prices.
Apart from this, cautious market sentiment is seen as another factor supporting the safe-haven precious metal. However, dwindling expectations of an immediate rate cut by the Federal Reserve could limit aggressive bets by gold bulls and cap further price gains.
The U.S. Federal Reserve kept its benchmark interest rate unchanged for a fifth consecutive meeting, keeping it in a range of 4.25% to 4.5%, despite intense pressure from U.S. President Donald Trump and his allies to lower borrowing costs.
However, the decision was dissented by Fed Governors Michelle Bowman and Christopher Waller, marking the first time since 1993 that two governors dissented from a rate decision.
In the accompanying monetary policy statement, the committee struck a more optimistic note, noting that the economy continued to expand at a solid pace.
Separately, Federal Reserve Chairman Jerome Powell said at a post-meeting press conference that the central bank has not yet decided whether to cut interest rates in September.
This pushed the dollar to a two-month high on the back of upbeat U.S. macroeconomic data.
Automatic Data Processing reported that U.S. private sector payrolls increased by 104,000 in July after a revised decline of 23,000 in the previous month. Separately, the Commerce Department released an advance estimate of U.S. gross domestic product (GDP) showing the economy expanded at a 3.0% annualized rate in the second quarter after contracting 0.5% in the previous quarter.
Traders are now looking to the core PCE price index, the Federal Reserve's preferred inflation gauge, for fresh momentum. Meanwhile, dollar bulls appear reluctant to make aggressive bets, helping gold prices attract some buyers during Thursday's Asian trading session.
Technical Analysis:
After breaking below the ascending triangle on July 25, gold prices fell overnight yesterday, fulfilling the measured decline of the triangle's consolidation. Meanwhile, gold began to rebound from the lower track of the box and the X-line. Suppressed by a bearish alignment of the upper moving averages, bulls need to wait for gold prices to fluctuate, allowing the 10, 20, and 50 EMAs to recover, and for the bearish downward alignment of the moving averages to turn flat before launching an attack in line with fundamental developments.
(Spot gold daily chart, source: Yihuitong)
At 16:39 Beijing time, spot gold was trading at $3311.03 per ounce.
- Risk Warning and Disclaimer
- The market involves risk, and trading may not be suitable for all investors. This article is for reference only and does not constitute personal investment advice, nor does it take into account certain users’ specific investment objectives, financial situation, or other needs. Any investment decisions made based on this information are at your own risk.
